Chapter 2: Bidding for Public Sector Contracts

The EU Procurement Framework

The term 'public sector' as used in EU member states covers central government, regional and local authorities, utilities, European institutions such as the European Commission (EC) and its related programmes, and other bodies governed by public law. The Commission estimates that public sector procurement in the EU in 2002 had a potential value of more than 1,000 billion euros, equivalent to about 15 per cent of EU gross domestic product.

All public sector authorities are subject to European public procurement rules, intended to secure open and fair competition, transparent and auditable contracting procedures and equal access to contract opportunities for all EU suppliers. Utilities (defined as entities operating in the water, energy, transport and telecommunications sectors) are required to comply with procurement rules that differ in some points of detail from those applying to other parts of the public sector.

Public procurement rules are defined in a series of EC procurement directives implemented at a national level through regulations and other forms of legislation. During 2002 revised versions of the directives were under review by the Council of Ministers and the European Parliament. Final agreed texts were expected to be approved by the end of 2002: the revised directives are likely to come into effect through national legislation during 2004.

The purpose of the procurement rules is not so much to establish consistent procedures across the EU member states, as to eliminate discriminatory and uncompetitive practices counter to the public interest, and to ensure public money is spent in a way that achieves best value. Authorities in the UK are able to apply their own procedures for tendering and contract award on the basis of standing orders, provided these do not infringe EU rules or the requirements of UK legislation and government accounting principles.

Public sector contracts for services and consultancy in the UK are governed principally by the following regulations:

• The Public Services Contracts Regulations 1993;

• The Public Contracts (Works, Services and Supply) (Amendment) Regulations 2000;

• The Utilities Contracts Regulations 1996;

• The Utilities Contracts (Amendment) Regulations 2001.